In a 56-page ruling, Judge Haywood Gilliam of the Northern District of California blocked the administration from moving forward with specific projects in New Mexico and Arizona, saying Trump couldn't disburse the funds without congressional approval. The lawsuit that prompted the ruling was filed by the American Civil Liberties Union on behalf of the plaintiffs, the Sierra Club and Southern Border Communities Coalition.

Although Friday's ruling does not prevent the Trump administration from using funds from other sources to build the projects, it's a setback for the President on a signature agenda item that has consistently been thwarted by Democrats in Congress. Construction on the projects affected by the ruling could have begun as early as Saturday, according to the ruling.

"The position that when Congress declines the Executive's request to appropriate funds, the Executive nonetheless may simply find a way to spend those funds 'without Congress' does not square with fundamental separation of powers principles dating back to the earliest days of our Republic," writes Gilliam, a Barack Obama appointee.

He added, "because the Court has found that Plaintiffs are likely to show that Defendants' actions exceeded their statutory authority, and that irreparable harm will result from those actions, a preliminary injunction must issue pending a resolution of the merits of the case."

The decision comes more than three months after Trump declared a national emergency to divert billions of dollars from the Pentagon for the construction of his border wall. The proclamation prompted a slew of lawsuits.

The lawsuit that prompted Friday's ruling argues that the declaration was "made solely out of disagreement with Congress's decision about the proper funding level, location, and timetable for constructing a border wall." It also alleges that the construction of the wall would negatively impact the environment and communities along the border.

CNN has reached out to the Justice Department for comment. The ACLU hailed Gilliam's decision.

"This order is a win for our system of checks and balances, the rule of law, and border communities. The court blocked all the wall projects currently slated for immediate construction. If the administration begins illegally diverting additional military funds, we'll be back in court to block that as well," Dror Ladin, an ACLU staff attorney, said in a statement.

In February, Trump declared a national emergency to unlock billions of dollars in federal funds to build a wall on the southern border, bypassing Congress after lawmakers refused to meet his multi-billion dollar request for border wall funds. Trump and his top officials had argued that there was a "crisis" on the southern border, though Democrats pushed against that argument, saying there's no security crisis but rather a humanitarian one.

The decision to invoke a national emergency and bypass Congress was met with bipartisan skepticism. Both chambers of Congress sought to overturn the declaration, but Trump vetoed the measure and the House failed to overturn the veto.

The Democratic-led House of Representatives also sued in an effort to stop Trump from using Defense funds for the border wall. A federal judge heard arguments in the case this week, though he did not say when he would rule.